CGj provides a summary of the Institute’s latest guidance notes published between April and September 2025, covering a wide range of topics from greenwashing and whistleblowing to NGO governance and the new stablecoin regulatory regime.

As an integral aspect of its thought leadership and professional development initiatives, the Institute routinely publishes guidance notes to keep governance professionals and practitioners in Hong Kong and the Chinese mainland abreast of the latest developments in governance, risk and compliance.

Apart from the four themes featured in this article – greenwashing, whistleblowing, NGO governance and Hong Kong’s new stablecoin regulatory regime – the Institute’s guidance notes issued in the second and third quarters of 2025 covered a number of pertinent topics, comprising A-then-H listings, preparing for the USM regime, the upcoming critical infrastructure bill, virtual asset staking, the new company redomiciliation regime, digitalisation and competition law, digital investigations and compliance priorities for directors.

Greenwashing

This two-part guidance note, titled Greenwashing: A Corporate Strategy for Sustainability Credibility, provides a practical overview of what greenwashing is, how it can undermine ESG and sustainability credibility, and what governance professionals can do to mitigate the risks.

Part one defines greenwashing as a form of corporate misrepresentation, ‘whereby companies make misleading or unsubstantiated claims about the environmental benefits or sustainability of their products and services, or unrealistic or unverifiable assertions regarding their decarbonisation efforts and netzero goals’. It identifies several types of greenwashing, including overly generalised terms and irrelevant claims, cautioning that such practices can erode stakeholder trust and attract regulatory scrutiny, which can impact brand perception and, ultimately, financial performance.

The guidance warns that beyond reputational damage, the legal and financial consequences are escalating globally. For example, in the EU, the UK, the US, Canada, Australia and Singapore, anti-greenwashing regulations now impose stricter requirements on environmental claims, with guardrails around language use and the evidentiary standards that corporates must meet.

In Hong Kong, while there is still no specific greenwashing-related legislation, regulatory expectations are rising in parallel with international developments. The guidance note observes that the Securities and Futures Commission and the Stock Exchange of Hong Kong are both becoming increasingly vigilant regarding ESG and sustainability reporting accuracies for listed companies. ‘Hong Kong will need to focus on tackling greenwashing as part of its ambition to be a leading international sustainable financial centre,’ the guidance note advises.

It also stresses the importance of a strong governance framework, noting that ‘governance professionals must raise awareness of the issue, steer their organisation away from greenwashing practices, and facilitate training for directors, other executives and frontline staff,’ especially in the ESG reporting process.

Part two of the guidance note pinpoints various measures companies can take to manage and mitigate greenwashing-related risks, particularly for those with a consumer-facing business or an international presence.

The first step is to understand the company’s regulatory obligations. This begins with mapping out all jurisdictions where the company operates or markets its products to identify relevant greenwashingrelated laws and regulations. Even in markets without explicit greenwashing rules, ‘companies should understand how existing consumer protection, securities and advertising laws might apply to sustainability claims’, the guidance note recommends.

The second step is to benchmark against global best practices. Beyond complying with current regulations, companies should monitor emerging global greenwashing regulations to stay ahead of future legal developments and stakeholder expectations. This helps determine whether meeting baseline regulatory requirements is sufficient or whether higher standards are needed to manage reputational risks.

The guidance note offers five key takeaways that governance professionals should consider advising their companies to embed within their governance frameworks.

• understand the company’s risk profile
• ensure operational alignment
• establish a robust ESG data infrastructure
• select appropriate ESG metrics, and
• commit to being transparent.

‘Greenwashing risk management should not be viewed merely as compliance-driven risk mitigation, but rather as an opportunity to enhance reputation by building lasting consumer trust through transparency and integrity in sustainability communications,’ it concludes.

Whistleblowing

Part one of the Institute’s Ethics, Bribery and Corruption Interest Group guidance note on whistleblowing, titled Whistleblowing – The Software and the Hardware to Thrive, published in January 2024, introduced the concept and explained how governance professionals can help their organisations develop a culture that encourages whistleblowing and ethical conduct. Part two, published in April 2025, sharpens attention on the operational elements needed by listed companies to make whistleblowing schemes credible and effective.

Under the Corporate Governance Code Provision D2.6, listed companies must establish a whistleblowing system that allows employees and external stakeholders to report concerns confidentially and anonymously to the audit committee or a majority-INED committee, on a ‘comply or explain’ basis. Code Provision D3.7 further requires the audit committee to ensure proper arrangements for confidential reporting, independent investigation and follow-up. Whistleblowing is positioned as part of the company’s risk management framework, with oversight from the board and with operational responsibility resting with the audit committee and the governance professionals supporting policy implementation and review.

Recent ESG governance reforms have also upgraded expectations around board-level oversight. ‘A credible whistleblowing system – especially one that captures concerns raised by employees and external parties – is a foundational component of a company’s ethical infrastructure. It is also a signal to investors that the company takes integrity seriously,’ the guidance note explains.

Governance professionals play a vital role in implementing whistleblowing frameworks. This includes developing clear policies that define reportable matters, outlining confidential reporting procedures and establishing protections against retaliation, with oversight typically assigned to the audit committee. Accessible reporting channels, such as email, hotlines or third-party platforms, are also essential to encourage reporting from both staff and external stakeholders.

Ongoing training and communication, incorporating the Independent Commission Against Corruption’s Anti-Corruption Programme, A Guide for Listed Companies, helps normalise whistleblowing as a constructive tool and reinforces the organisation’s commitment to integrity. Governance teams must also maintain robust internal processes for logging, investigating and escalating complaints, preparing reports for the audit committee and conducting regular policy reviews with internal audit and board oversight to ensure continued effectiveness and credibility.

The guidance note also points out that, despite clear requirements under the Listing Rules, whistleblowing systems often face challenges such as box-ticking disclosures with little evidence of effectiveness, limited capacity within audit committees to manage whistleblowing risks and the absence of dedicated legal protections for whistleblowers in Hong Kong. This places greater responsibility on companies to build trust through strong internal safeguards. Additionally, weak or opaque whistleblowing practices can harm international perceptions of a company’s governance maturity, even if no regulatory breach occurs.

NGO governance

The latest guidance note issued by the Institute’s Public Governance Interest Group, titled NGOs and Governance Professionals’ Contributions, is a four-part publication designed to help governance professionals ensure accountability, integrity and sustainability in non-governmental organisations (NGOs), without overburdening these often resourceconstrained entities.

Part one of the guidance note highlights how governance professionals can play a pivotal role in strengthening NGO governance, particularly around board composition and independence. Many NGOs, especially founder-led or communitybased ones, struggle with boards made up of close associates, which may lack the objectivity and diversity of expertise needed for effective oversight. ‘A well-structured board is the cornerstone of good governance in any NGO,’ the guidance note asserts.

Governance professionals can assist in a number of ways, including by encouraging board rotation and renewal, guiding independent and skills-based recruitment, defining and clarifying the distinct roles and responsibilities of the board and senior management, and helping manage founder succession and the transition toward more sustainable governance structures. In addition, as clarity of purpose is paramount for NGOs to remain effective and accountable, governance professionals can help by facilitating strategic planning, reviewing funding proposals, developing reporting frameworks, and supporting both internal and external communications.

Part two looks at how governance professionals can strengthen transparency and financial oversight, as well as ensure an NGO complies with all legal and regulatory obligations. ‘The governance professional helps protect the NGO’s financial integrity by implementing strong financial oversight and transparency practices. This ensures that funds are used efficiently and for their intended purpose, and bolsters the NGO’s reputation among donors, regulators and the public, leading to continued support and growth,’ the guidance note states. Furthermore, the governance professional can guide the NGO in identifying potential legal and regulatory risks, and offer proactive measures to manage and mitigate such risks.

In part three, the guidance note turns to operational governance, in particular how governance professionals can enhance NGO effectiveness by helping to establish and manage board committees tailored to specific organisational needs. Such committees could comprise core audit and finance, nomination and remuneration committees, as well as additional committees such as fundraising, risk management, HR, programmes, and marketing and communications committees, depending on the particular needs of the NGO. For smaller NGOs with limited resources, the governance professional could recommend the formation of an overall governance committee to coordinate several functions. By guiding committee formation and clarifying roles, governance professionals can help NGOs professionalise operations while preserving the integrity of their mission.

The fourth and final part of this guidance note explores the role that governance professionals can play in helping NGOs navigate the complexities of governance, risk and strategy, and in sustaining and amplifying the mission-driven work of NGOs, beyond merely establishing relevant governance structures. The guidance provides a clear framework for governance professionals to build a culture of integrity and ethical behaviour, to develop board capacity and effectiveness, and to enhance risk management, internal controls and strategic planning.

Stablecoin regime

This three-part guidance note, titled Governance Considerations under Hong Kong’s New Regulatory Regime for Stablecoins, provides governance professionals with a clear roadmap to navigate the city’s new licensing regime for stablecoin issuers.

Part one sets the foundation by explaining the Stablecoins Ordinance, which came into effect on 1 August 2025. Under this framework, the issuance of fiat-referenced tokens will be subject to licensing, while algorithmic stablecoins are expressly prohibited. The guidance clarifies key definitions, including specified stablecoins, which are fiat-backed tokens designed to maintain a stable value relative to an official currency, and active marketing, which refers to any promotional or solicitation activity directed at the Hong Kong public that could reasonably lead to the use or adoption of a stablecoin. It also outlines the activities that fall within the regulatory parameters – issuance, offering, marketing and related operations – all of which will require authorisation.

Part two explores the licensing criteria and supervisory expectations that stablecoin issuers will need to meet. A core principle is the full backing of outstanding specified stablecoins by high-quality, liquid reserve assets held in the same referenced currency, with reserves segregated from other company assets and safeguarded from creditor claims. Beyond financial soundness, the guidance note sets out expectations around internal controls, risk management and independent audit. Governance professionals are called on to advise boards on policies governing issuance, redemption and distribution, ensuring that these are carried out in a prudent, transparent and compliant manner. The guidance note also highlights governance structures, noting the requirement for key personnel to be ‘fit and proper’ and for boards to include a significant proportion of independent directors. Collectively, these measures point to a regime that demands high standards of governance and accountability, with governance professionals central to guiding entities through the complexity.

Part three turns to enforcement and transition. The Hong Kong Monetary Authority is empowered to issue reprimands, financial penalties or even licence bans, with appeals channelled through a dedicated tribunal. Licensed stablecoin issuers will also fall within the ambit of Hong Kong’s anti–money laundering and counter–terrorist financing regime, requiring enhanced due diligence, transaction monitoring and ongoing compliance. Transitional arrangements provide a six-month grace period for pre-existing issuers that apply for licences within the first three months of the regime. The guidance note closes with a governance readiness checklist, encouraging entities to assess their board oversight, risk controls, technology resilience and disclosure protocols.

The guidance notes covered in this article are available in the Thought Leadership section of the Institute’s website: www.hkcgi.org.hk.